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Forbes has run an interesting story listing factors that could work in Blockbuster’s favor and keep the company around for at least a few more quarters. While the the article is mainly targeted at bond investors that aren’t risk-averse, the reasons listing why Blockbuster could be a good short-term investment are also relevant to the home entertainment market in general.
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Here are Forbes’ reasons not to write off Blockbuster completely just yet:

  • Roughly one third of domestic stores generate more than three quarters of cash flow . . . With store leases on average one to two years (according to management), rapidly closing stores should leave a very profitable core store base.
  • New releases represent almost two thirds of revenues.
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    Recent deals with major studios provide Blockbuster with a “monopoly” on new releases giving the company an exclusive rental window and a head start over nimble competitors. Studios want Blockbuster to survive.
  • Hollywood Video bankruptcy eliminates the largest competitor in the industry. Reduced capacity through thousands of store closings (Hollywood and local video retailers) will ultimately bring supply back in line with demand. Take a look at same store comps at Best Buy in an ex-Circuit City world.
  • Blockbuster’s strong brand and brand awareness provide a key competitive advantage. Management should be successful in leveraging these assets across various forms of distribution – by mail, kiosks and electronically.

With a new or refreshed management team and some concentrated efforts, could ol’ Blockbuster still have a few rounds left in it, Insiders? Will any of you be picking up some cheap BB notes on the hopes of a quick cash-in?

(via Forbes)

13 Responses to “Blockbuster a Good Investment Opportunity?”

  1. Visitor [Join Now]
    slidecage [visitor]

    lol i own 100 shares at 2.84 per share so anyone buying helps me

  2. Member [Join Now]

    ill buy blockbuster stock, … only after chapter 11 closes, and then new stock trades for 3 months on the open market. then its straight up!!!

  3. Visitor [Join Now]
    Nomo Blockbuster [visitor]

    Now that Blockbuster has lost its 28-day window for “The Blind Side,” Netflix and Redbox will reap the benefits and make up for the lost revenue instantly.

    In addition, Blockbuster’s 2010 Q1 earnings will likely be worse than expected, just like last quarter, and the stock price will plummet again and stay down. So sell before the release of those earnings, if not sooner. You’ll be glad you did.

  4. Member [Join Now]
    john [miezu78]

    im kicking myself lol 3 weeks ago I bought 2580 shares at .29 and held them untill last week worried that they will file for chapter 11 so I sold them last week for .30 and now im kicking myself aghhhhhhhhhh

  5. Visitor [Join Now]
    John Ramsey [visitor]

    The Blockbuster in my town charges $4.99 for an older movie rental. I would not pay that much for a new movie rental. I will stick to redbox even if I have to wait the 28 days or so.

  6. Visitor [Join Now]
    Tommy Lee [visitor]

    where can I buy Blockbuster stock.